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Parliamentary Select Committee supports ARCH calls for extension of RTB to be funded by Central Government
10/02/2016
Labelled as
Consultation

The Communities and Local Government Committee (CLG) launched an
Inquiry into the viability and sustainability of housing
associations looking in particular at the impact of extending the
Right to Buy (RTB) to Housing Associations and the four year
mandatory reduction in social rents announced in the Summer Budget
2015.

We submitted
representations to the CLG Committee Inquiry arguing that the
proposal to fund the extension of RTB to housing association
tenants should not be funded by forcing councils to sell council
housing in high value areas.

We argued that stock retained councils have never received
government funding towards the cost of providing RTB discounts for
council tenants and the cost of giving RTB discounts for council
tenants has been borne by the remaining tenants who cannot afford
to (or do not want to) exercise the RTB.

We made the case to the Committee Inquiry that it is doubly
unfair that the remaining stock retained councils and their tenants
should now be asked to help fund the payment of RTB discounts to
housing association tenants and the construction of replacement
housing association homes.

The CLG Committee published its report and findings on 10
February 2016. In regard to funding the cost of extending the RTB
to housing associations, ARCH welcomes the CLG Committee's
recommendation in the Report that the"extension of Right to Buy to
housing association tenants should be funded by central government
rather than a levy on local councils" - this being what we argued
in our submission to the Inquiry.

The Committee disagrees with the government proposal to fund the
RTB discounts for housing association tenants with the proceeds
from the sale of high value council homes. The Committee also finds
the funding model for the RTB discounts to be extremely
questionable and calls on the government to set out the fully
costed evidence for the proposals.

The Committee findings are that large numbers of homes sold
through the statutory RTB for council tenants have quickly become
private sector rental properties. The Committee believes the
potential for selling social housing assets at a discount, only for
them to become both more expensive and possibly lower quality
housing in the private rented sector, is a significant concern

The Committee also considered the proposed 'pay to stay' policy,
where differential rents would be charged according to tenant
income, and welcomes the government's announcement that this will
be voluntary for housing associations. The Committee believes the
suggested thresholds should be reviewed and supports housing
associations being given local discretion, should they choose to
adopt the policy.

The Committee also recognised the scale of the government's
policies regarding Starter Homes and the new legal duty on councils
to ensure provision of 200,000 new Starter Homes across all
reasonably sized sites. However the Committee recommends that
Starter Homes should not be built at the expense of other forms of
tenure if there is a local need for affordable rented
accommodation. It is important that homes for affordable rent are
built where the need exists, particularly as Starter Homes can now
count towards satisfying the affordable housing allocation in
section 106 agreements.

Although it is doubtful that the Committee's recommendations
will change the Government's mind on these issues, the pressure is
mounting and the timing and findings in this report will no doubt
impact on the debate on the Housing & Planning Bill in the
Lords and ARCH will continue to make the case for council housing,
stock retained councils and their tenants.

"ARCH welcomes the Committee's report and findings and fully
supports the Committee's recommendation that the Government's
extension of Right to Buy to housing association tenants should be
funded by central government rather than through a levy on local
councils.

In its own submission to the Committee inquiry ARCH argued that
the proposal to fund the extension of RTB to housing association
tenants by forcing councils to sell so called "high value" council
housing, is both unfair and ill-conceived as well as being contrary
to the principles of localism and the self-financing settlement
entered into in good faith by stock retained councils in
2012.

Councils do not receive any direct government funding to
reimburse the cost of RTB discounts for council tenants exercising
their RTB - the cost of which is in effect borne by council tenants
through the housing revenue account - and it is therefore doubly
unfair that councils and their tenants should be asked to reimburse
housing associations for the cost of RTB discounts provided to
housing association tenants.

In regard to the government's proposed mandatory 'pay to
stay' scheme, ARCH also supports the Committee's recommendation
that the suggested thresholds should be reviewed and would
urge the Government to support stock retained councils being given
the same local discretion as housing associations to adopt a 'pay
to stay' scheme where it is considered appropriate to the local
housing market.

ARCH would urge the government to carefully consider the
findings and recommendations in the Committee's report and to amend
the Housing & Planning Bill accordingly"